Going Public Shouldn’t Harm Artisan Funds: Litman Gregory

By Brendan Conway

Artisan Partners Asset Management (APAM) went public earlier this month. Investors in such cases can rightly ask whether a firm’s priorities are changing. After all, it has to serve its own shareholders in addition to owners of its funds.

Litman Gregory’s investment team says it’s not worried about Artisan in the March issue of the No-Load Fund Analyst:

Whenever a fund family goes public, our main concern is the increased incentive to grow assets at the expense of shareholder returns. The pursuit of asset growth can lead investment teams to run additional products that dilute a team’s focus on existing products, spend more time marketing (as opposed to investing), and firms may be less responsible in limiting the asset base of their respective strategies.

We are not concerned that the IPO will harm the ability of our recommended Artisan funds to generate excess returns for clients over the long term. Artisan has told us that there are no plans for either the value team or growth team to manage additional products. We expected this to be the case as, for several years, both teams have been running three products that cover various market caps and geographies. As for managing asset growth, Artisan Small Cap Value (ARTVX) and Artisan Mid Cap (ARTMX) have been closed to new investors for quite some time, and we would not anticipate them reopening these funds due to the IPO. We continue to recommend Artisan Small Cap Value, Artisan Mid Cap Value, the all-cap Artisan Value, and Artisan Mid Cap.

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